The Navy said at around 11 am today, school children saw four men in pathan suit, talking to each other in a different language. They were spotted near Karanja island, which is about eight miles away from naval base, Abhimanyu.

Sources said the school children heard two words repeatedly: "ONGC" and "school". The ONGC has offshore installations close to the area.

Security has been beefed up at Mumbai's sensitive locations along the coast, including the iconic Gateway of India, the Raj Bhawan, Bombay High, the Bhabha Atomic Research Centre, and other major establishments near the sea.

Defence sources told India Today TV that all the agencies including the Anti-Terror Squad and the intelligence have been alerted. Meanwhile, a team of NSG stationed in Navi Mumbai is on stand by. They have no role to play in the ongoing combing operation.

The alert came amid heightened tension between India and Pakistan over the Uri army camp attack last week, in which 18 Indian soldiers were killed by suspected Pakistani terrorists.